Playing poker isn’t just about having the best cards. The top players are masters at bluffing and can coax others into raising the stakes before forcing them to fold. They never give anything away and always exude confidence, even when holding a weak hand.
Parallels are often made between poker and a whole range of business negotiations - from agreeing pay rises and promotions to company mergers and takeovers. But is it best to keep your cards close to your chest? Or should you be more open?
People often think that showing their hand in a negotiation will give the other party an advantage, but that’s not entirely true. Being transparent about your priorities can help create more value for you and the other side.
A negotiation is often seen as a competition where someone wins and the other person loses. You think, “This is a debate that I need to win so I’ll make my case and try to convince the other side to see things from my perspective”. This type of thinking is flawed because it means you believe the other party’s point of view is wrong, which can lead to a ‘fixed-pie’ bias – the more I win, the more you lose. It’s seen as a zero-sum game.
Instead, you should see negotiating as a joint problem-solving exercise rather than a debate. It’s about you and the other party listening to each other and acknowledging and appreciating differences. You don’t have to be a pushover, but it’s important to look at this as a creative process where you look to increase the size of the pie. Finding common ground and achieving both parties’ objectives creates a bigger pie, so everyone can win.
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See negotiating as a joint problem-solving exercise
Understanding your own preferences and priorities is essential when thinking about how to be transparent and what to reveal. Before entering a negotiation, you should:
1. Rank your priorities in terms of importance
2. Include “stretch goals” - desired aims that might ambitiously but realistically be achieved
3. Have alternatives in mind for what happens if you can’t come to an agreement
4. Establish your bottom line – but don’t reveal it.
You should then look at the negotiation from the other side’s perspective. Consider their priorities, stretch goals, possible alternatives and bottom line.
Question them about what they say they want and their interests (their underlying motivations). Listen carefully to what they say. Get them to open up by discussing likely scenarios and asking why they want something in particular.
Give a little to get something back
One way of getting information about the other side’s preferences, priorities, interests and positions is to share some of your own. Offering information builds trust and can help with joint problem-solving. For instance, sharing details about your interests allows the other side to understand what drives your requests and demands. They may not agree to your requests, but they might find a different way to satisfy your underlying interest. Similarly, talking about your priorities is an excellent way to show what is and isn’t important to you.
Some of the issues that are critical to you may not be priorities for them, and vice versa. If that’s the case, you can trade things so everyone gets what they want. Being flexible when discussing alternatives is important, as you’re more likely to reach a compromise that makes everyone happy.
But refrain from revealing preferences for specific alternatives; doing so could weaken your negotiating position.
While it’s necessary to discuss your priorities, you should never reveal your “reservation price” - your bottom line or how far you’re willing to go to agree on a deal. You want the best possible terms for you, which is difficult to achieve if you discuss your limits. In that scenario, the people you’re negotiating with may try to push you as far as they can to win the best deal possible for them.
Lying is also a bad idea. As well as being ethically wrong and potentially illegal, it can seriously disrupt the negotiation, which would be to your disadvantage. Imagine trying to bluff by saying something is very important to you (when in fact it isn’t) in order to secure bigger concessions from the other side. You could easily ‘gain’ something that you fundamentally don’t value. Being dishonest can make it difficult to finalise talks or pin down a contract, and it may damage your reputation if you get caught out, giving the other party cause for revenge.
Lying is also a bad idea
This issue often comes up in salary discussions for a job offer. Is it right to lie about a current wage so that a prospective employer pays more? Absolutely not. There are instances where someone has had a job offer rescinded or been fired from a new role after getting caught lying about their previous salary. You don’t want to give any false information that the hiring company can easily verify. Discovering that you lied can lead to mistrust and weaken your negotiating position. Or worse still, you could be overlooked for the role and lose out entirely.
Dr Gillian Ku is Associate Professor of Organisational Behaviour at London Business School.
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